Question

Barry buys a new washing machine.

The value of the washing machine depreciates by 20% each year.
(a)
Barry says 'after 5 years the washing machine will have no value'.
Barry is wrong. Explain why.
Barry wants to work out the value of the machine after 2 years.
(b)
By what single decimal number should Barry multiply the value of the machine when new?

Answer 1

The machine decreases in value by 20% each year.

After 1 year the machine is worth only .8 of its original value.

The machine will only decrease by .2 * (.8 A) in the second year not .2 * A where A is the original amount.

A1 = .8 A

A2 = .8 A1 = .64 A value of machine after 2 years

.8 is the value Barry needs when the machine is new

.8^n never goes to zero

After 10 years value = .8^10 A = .11 A of its original value